Content of the material
- Guidelines for rebuilt vehicles vary
- The Steps to Rebuilding a Title
- Purchase the Vehicle
- Repair the Vehicle
- Get the Inspection
- File the Final Paperwork
- What states are title washing states?
- Branded Car Titles
- When a salvage vehicle is repaired
- What’s The Difference Between a Clean Title And a Rebuilt Title?
- Title Terms You Should Know
- Total Loss
- How does a rebuilt title affect the value of a car?
- What you need to know about salvage titles
- What is a clean title?
- Getting insurance with a salvage or rebuilt title
- Some final tips
Guidelines for rebuilt vehicles vary
If the vehicle is restored, in many states it must be inspected and ultimately a “rebuilt title” can be issued for the vehicle from the state’s Department of Motor Vehicles (DMV). A reconstructed vehicle with a rebuilt title CAN be driven on the highways. The guidelines for getting a rebuilt title vary by state.
For example, the state of Florida requires a vehicle to have a salvage title if the insurance company declared the vehicle a total loss. These titles generally indicate whether the vehicle is “rebuildable” (can be repaired and driven) or “not rebuildable” (must be sold for parts).
In some other states, they “brand” or mark the vehicle’s title when the estimate of damages reaches a certain percentage of the vehicle’s retail value (New York and Louisiana, designate it at 75 percent).
The rules can be complex for rebuilt and salvage vehicles. For example, the Georgia Department of Revenue notes that anyone who purchases a salvage or wrecked motor vehicle for the purpose of restoring or rebuilding it must be licensed as a rebuilder.
In Nevada, vehicles that have had certain repairs must be titled as rebuilt even if they don’t meet the definition of a salvage vehicle. This applies to any vehicle that has had one or more of the following major components replaced:
- Cowl assembly
- Rear clip assembly
- Roof assembly
- Floor pan assembly
- Conventional frame coupled with one additional major component
- Complete front inner structure for a unibody
Before purchasing a rebuilt vehicle, it should be thoroughly checked out by your own mechanic. You also should check to see if the car can be insured with your current insurer since their underwriting rules may not allow them to write policies for cars with salvage or rebuilt titles.
Many auto insurance carriers simply don’t offer policies for rebuilt cars. Or, if a policy is offered, it may be only for liability and not all types of car insurance — such as collision and comprehensive coverages –because it’s too hard to determine a rebuilt car’s true value.
If you purchase a vehicle with a rebuilt title you’ll have to shop around and compare car insurance rates to find the right car insurance company for your needs. Look for insurers, such as Progressive, that allow full coverage on cars with branded titles.
The Steps to Rebuilding a Title
Here’s a brief summary of the steps you will typically have to take to remove a salvage title.
Purchase the Vehicle
This may or may not be as simple as it sounds. Some states will only allow licensed rebuilders to purchase or own a salvage title car. If that’s the case in your state, you will only be able to own the vehicle once it has been repaired and gone through the inspection and rebranding process.
Repair the Vehicle
Make sure you know what you are doing or have the vehicle repaired by a certified mechanic who does. Hold on to any and all paperwork on the vehicle and take a lot of pictures before and during the repair process.
Get the Inspection
Obtain and fill out the necessary forms from the DMV to have the car inspected. This is where all of that paperwork and those photos come into play. The DMV will most likely require you submit your bill of sale, the salvage title, the photos, and other documentation as part of the process. Once you’ve handled the paperwork, schedule an inspection, and get the vehicle inspected.
Remember, you can't legally drive the vehicle to the inspection facility, so you will likely have to have it towed there.
Once it has passed the inspection and you have paid the inspection fees, the inspector may attach a decal to the vehicle indicating that it has passed.
File the Final Paperwork
Your next move will be to apply for the rebuilt title, which will require filling out more forms and paying more fees. You should then receive the title with a statement branded on its face, indicating the vehicle has been rebuilt.
If your vehicle received its salvage title in another state, you may have to have it inspected and rebranded in that state before you can register it at home. Check your state’s regulations before making your purchase.
What states are title washing states?
One reason vehicle title washing is easy is because each state in the U.S. has its own definitions of how a severely damaged car title is branded.
However, the list of title washing states is ever-changing as more are becoming increasingly compliant with the National Motor Vehicle Title Information System (NMVTIS). States provide a vehicle’s Vehicle Identification Number (VIN) to create a database that provides complete and accurate vehicle histories to help combat vehicle fraud. As of April 2022, 49 states and the District of Columbia provides data and inquires into the system before issuing new titles. The state of Hawaii is currently in development to reach compliance with NVMTIS.
Branded Car Titles
By definition, car title “branding” is the process of giving a label other than clean to the title of a vehicle. This is an indicator of what type of history the car has. Vehicle titles are handled by state agencies, so they can vary from state to state.
Typically, buying a car with a branded title means you’re buying a used car and it carries a negative connotation. It usually refers to vehicles that have experienced a collision, been in a fire, and/or have flood damage. These vehicles may also have been sold for scrap, or have gone through insurance claims and major repairs.
What are the different title brands? There are four major classifications for car titles. While these can have different names depending on the state you live in, these are the most common title types seen:
- Clean – A clean title means the car hasn’t received any major damage that might deem it a total loss. This is the most ideal title to search for when buying a used car.
- Clear – Not to be confused with clean, a clear title means there’s no financial lien preventing the vehicle from being sold. Simply put, the car is owned free and clear by the seller, and isn’t tied to creditors or third parties that could claim ownership.
- Salvage – If a vehicle is involved in a major accident and is damaged anywhere from 75% to 90% of its value, it’s deemed a total loss and given a salvage title. Be cautious about vehicles with this title – it’s typically not safe to buy salvage title cars. These vehicles may need extensive repairs, may be expensive to insure, or be uninsurable.
- Rebuilt/reconstructed – A rebuilt or reconstructed title is given to a vehicle that was repaired after being classified as salvage. Basically, it means the car experienced a lot of damage but was inspected by the state once repairs were done and classified as being “fixed.” The problem with these cars is that even though they’re repaired, they may need further repairs, or may no longer be reliable.
Note that there are other branded titles that some states recognize including lemon, flood, bonded, and junk. Each state’s list of title brands varies, and you can check with your local DMV or Secretary of State to see which brands are recognized in your state.
When a salvage vehicle is repaired
A salvage vehicle can be repaired and even driven legally. However, it must be repaired and receive a rebuilt title. Once the vehicle has been repaired, it must be inspected by an authorized state person. It will then be registered with a rebuilt title. For the vehicle to be registered, the repair company or person must show receipts for the repairs.
Rebuilt cars can also be insured by some providers and even financed for purchase. They will have a greater resale value than a salvage car.
One of the confusing aspects of rebuilt titles is they have different names. For example, they may say “restored” or “reconstructed.” In some states, the vehicle may even receive a clear title with the word “salvage” included. A reason for confusion about such titles is the use of the word “clear” versus “clean” because the two aren’t the same thing, even though they may be used interchangeably.
Salvage vehicles can become roadworthy if they are rebuilt. When you decide to purchase a pre-owned vehicle, make sure you know if you are getting a clean title or a salvage title or one for a vehicle that has been repaired from salvage condition.
What’s The Difference Between a Clean Title And a Rebuilt Title?
Once a vehicle has been in an accident and deemed a total loss, it will be given a salvage title. The salvage title indicates that the vehicle has not yet been repaired and that it cannot be safely or legally driven.
If the vehicle is repaired to the point that it is safe and legal, it will get what is known as a rebuilt title. This means that it meets the requirements to be insured and that it can be driven. This is not the same as a clean title, however, as clean titles indicate that the vehicle was never deemed a total loss.
Title Terms You Should Know
Of all the documents you have related to your vehicle, the title is likely the most important. Its job is to designate the legal owner of the vehicle, so it’s a big deal. Some states allow the direct transfer of ownership via the title, but some require other forms and/or actions to be taken before a vehicle can change hands.
Salvage titles designate vehicles that have been wrecked and judged to be a total loss. They have not been repaired and are not roadworthy from a safety or legal standpoint.
Rebuilt titles are applied to vehicles that have been wrecked and deemed a total loss, but that has been repaired. These vehicles are drivable, insurable, and roadworthy, but there’s nothing in the rebuilt title that indicates the quality of repairs.
When a vehicle is a total loss, it doesn’t mean that there is no value. Declaring a total loss just means that the cost to repair the vehicle exceeds its value. Insurance companies apply this title, and will generally issue a payout for the vehicle’s value instead of paying to repair it.
How does a rebuilt title affect the value of a car?
A vehicle having a rebuilt title will likely have a lower market value because it underwent significant damage. Compared to similar models with clean titles, a car with a rebuilt title could have 20% to 40% less value, amounting to potentially thousands of dollars.
What you need to know about salvage titles
Typically, a salvage title means that the car has been deemed a total loss and is no longer safe to drive. Insurance companies generally make the call on whether the car is considered “totaled,” and what happens next depends mostly on which state you live in. In Wisconsin, for example, a car may be considered salvage after an insurance company has determined that its damage would cost more than 70% of the car’s fair market value to fix.
When an insurance company declares a vehicle as a total loss, the state motor vehicle agency handles the process of salvage title, and the process varies by state. If a salvage title is issued, you may not be able to legally drive the car in your state. But that doesn’t mean you can’t still cash in. If you sell the car for scraps and parts, you may be able to make some money.
What is a clean title?
A clean title is one you would receive in most cases when you purchase a vehicle. A brand new vehicle has a clean title and most pre-owned vehicles that can be driven safely and are insurable. Insurance companies will insure a vehicle with a clean title for the amount of its value. You can also take it to the DMV to register your vehicle and receive new plates.
Getting insurance with a salvage or rebuilt title
Salvage title insurance may be hard to find since the vehicle, in many cases, isn’t safe to drive. However, rebuilt title insurance is easier to obtain, but certain stipulations will still apply.
Even after the necessary repairs are made, some insurers may only offer liability coverage. Many insurance carriers will not extend full coverage for salvage rebuilt vehicle because it is challenging to assess all of the pre-existing damage the vehicle has incurred. Collision and comprehensive coverage, which are both optional on standard auto policies, are unlikely to be offered with this type of title.
Since a rebuilt title signifies that the vehicle is no longer in its pristine, undamaged state, its value is much lower. Furthermore, because there may be undisclosed or unseen damage in a rebuilt vehicle, insurance companies will also view this type of title as being more likely to pose a risk on the road.
After you have found an insurance company to insure a car with a rebuilt title, you may be able to take more steps to receive more coverage. To prove that a vehicle with a rebuilt title is insurable, you may be able to provide more information to your insurer. This includes a statement from a professional mechanic indicating that your vehicle is in good working condition, pictures that show the its present condition and repair receipts, which is a given when you purchase a vehicle with a rebuilt title.
Some final tips
Again, we consider a salvage-title vehicle to be a risky buy that we don’t recommend. But if you’re ready to take the plunge or already have such a car in your driveway, here are a few final tips:
Financing may be difficult. Because it’s difficult to value a salvage-title car and there are insurance issues to consider, it can be hard finding a lender. Be prepared to pay cash. Understand local laws. Damage thresholds and inspection requirements vary by state. Research local laws so you know what you’re getting into with a salvage-title car. Run the VIN through databases. The National Motor Vehicle Title Information System is a federal database designed to limit title fraud. Search the vehicle identification number (VIN) of any vehicle you are considering. Also, you should pull a vehicle-history report for the car through Carfax or AutoCheck; again, you’ll just need the VIN. Prepare to buy for life. Salvage-title vehicles can be very difficult to sell. If you purchase one of these, be prepared to drive it until the wheels fall off.